photo credit: RowdyKittens

Theme parks give discounts to cities to encourage them to arrange a bus trip of school kids during the summer. They also give discount coupons to credit unions. Sea World even has had adult tickets at kid prices on their website.

So before you go to a theme park and buy at the gate, do some hunting. Discounts abound. Even sites like Retailmenot.com may have discounts for amusement parks!

photo credit: LaPrimaDonna

With tax time here, I start to look at my piles and files of paper and think do I really need all this? Most of it has confidential information like account numbers and social security numbers.
Then I decide I need to start shredding them. But how do you shred them?

Occasionally civic groups may have an annual shredding event. The civic group does this as a fund raiser. They ask for donations and they take the shredded paper and get paid by a recycler for it.

Some banks as a service to their customers have semi-annual shredding days. The bank will hire a shredding company (the same one they use for their regular document shredding) to come shred the documents for their customers. The bank looks good to their customers and the shredding company sometimes will get referrals to other businesses.

While the shredding events are nice I have problems with them. I have to store all that paper until the event happens. If I miss the event I may have to wait another year. My second problem is there are other people are handling my documents before they are shredded. If it is windy, documents may get blown away. It is better than just tossing the papers in the garbage. So if it works for you great.

You can always pay someone to shred your documents. There are several companies in the phone book. Office Depot even started a shredding service at most of their stores. Office Depot charges $0.99 a pound for this. Paper does not seem like it weighs much but it adds up quickly. This is why the post office charges by the ounce.

I have a paper shredder While it is convenient there are issues. The first thing I discovered is the maximum sheets capacity is not even close. My shredder has a 5 sheet maximum. At best it only can handle 3 sheets at a time. At my former job I had one paper shredder that had a 15 sheet maximum. Yet the most I could put in was 7. If you ever try to put more paper in, it would most certainly jam up. You see the shredder can handle it but they do not tell you that you will need to clear out the shredding teeth if you go up to that capacity. WARNING: NEVER ever try to clean these out with the unit plugged in. Unless you want to shred your fingertips.

The advantage is I can shred anytime. I do not have to save it, transport it or anything else.

So what should you look for in a paper shredder. Capacity! You want the highest sheet maximum you can afford because once you divide this in half you know what the true shredding capacity is. Then the capacity of the waste basket. The bigger the better. Sometimes like now I will sit down and shred old files. You do not want to have to stop all the time to empty it.

Second is to make sure it does more than strip cut. Strip cut is exactly that, the paper is cut in strips. It would be easy to put back together. Get a cross cut or confetti cut shredder.

While you may find paper shredders for under $50, I can say you will not be happy with it. After using the one at work. I wound up getting a better shredder.

What do I recommend. I like the Aurora C1210. It has a 12 sheet capacity, so it really can do 6 sheets. It has a removable basket so you do not have to take the top off. It also is on wheels. Wheels? Yes wheels make it easy for you to move it from room to room. In and out of a closet. The price on it is normally $129.99 but right now Amazon has it on sale for $69.98. At that price it is a great deal. If I did not have a shredder already I would definitely buy this one.

• Categories – This filing method can be as simple as an in and out box. But when trying to retrieve something from an inbox, you may have to go through a stack of papers. More complex method is to use Bank, Bills, Keep, Work. You can even break this down further. Bills-Electric, Bills-Rent, etc. or Bank-Chase, Credit Card-Discover, etc.
• Alphabetical – This system in its basic form is A-Z. This can be divided between vendor names and client names. Where there are A-Z for vendors and A-Z for clients.
• Chronological – Is a time based system 1-31 days, January –December, and yearly folders. This is also can be called a Tickler because each day it tickles your memory. You look in that day folder. Today is the 20^th so I look in the folder called 20. I deal with what is in that folder. It is emptied and either moved to the month folder if completed or a future date to finish.

 When thinking about a filing system instead of thinking how to store it you should think “how will I find it?” When I think of this I think of Radar O’Reily from the TV show MASH. When someone asked where the file for ordinance was because they could not find it under O, he said look under B. “B?” they replied. “B for BOOM!” he said. This is how we want our system to work. We want to be able to find things. We do not need to be concerned if others can.

 So which of the above 3 is the best for you?

• Categories – Like Radar that category that something is, this is where you find it. So if instead of thinking of AT&T, you think of phone or instead of Chase Home Mortgage, you think mortgage. Then this way of filing is more suited to you. Cons: If you have many utility providers, one for gas, one for electric, one for water, etc you may have a mix of bills all together.
• Alphabetical – Unlike the categories, if you think ConEd for power or Sprint for phone This may be a better system for you. You will file each vendor in their own folder. Cons: If you switch vendors or providers a lot you may have a lot of folders and very little paper.
• Chronological – If your problem is forgetting due dates or you can remember it happened in March or 2008 this is the system for you. Cons: You may find yourself looking through 2 years of papers if it happened in December or January. Or you know it happened in Spring but not the month you may be looking at 3 folders.

My solution is to use a combination method. It may be the solution for you too.

1. Chronological – For my tax information and returns I use a chronological filing. Each year has its own folder.
2. Alphabetical – I use this for employers, clients and vendors. I remember the name but not when it happened. So they each get a folder with their name.
3. Categories – I use categories for filing bank statements. Each bank account has its own folder. Bank – Chase, Bank-ING. For initial agreements and for papers that are not monthly statements, such as credit cards, loans, automobiles, they have a folder. Credit card-Discover, Loan- Student, Loan-Jeep, Car-Jeep, etc.
4. For my monthly bills, I have them filed under the vendor name because Quicken reminds me of when they are due.

 I hope this helps you in figuring out how to set up your own system. While no system is perfect for filing, if it helps you to retrieve papers when you need them, it works well.

 So the question became as I started just putting files in the drawer. What do I really need to keep?

According to the IRS, “The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.”

1.  
   1. You owe additional tax and situations (2), (3), and (4), below, do not apply to you; keep records for 3 years.
   2. You do not report income that you should report, and it is more than 25% of the gross income shown on your return; keep records for 6 years.
   3. You file a fraudulent return; keep records indefinitely.
   4. You do not file a return; keep records indefinitely.
   5. You file a claim for credit or refund after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.
   6. You file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.
   7. Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Kiplinger.com has additional info. They say you should keep you tax forms forever but the supporting documents you can get rid of after 3 years. If you were self employed they say you should keep the supporting documents for 6 years.

Scanning in your old tax forms can save space and be a good reference since the IRS routinely destroys tax returns after 5 years. So if they come asking for 6 or 7 years, you better have them because they may not.  If you want to scan in these documents to your computer be careful. The Motley Fool says, “If you use a computer-based system, note that you still need to keep the original paper documents too, because the IRS won’t just take your word on the accuracy of your computer data.”

Since this is all over the board for dates so let’s simplify things. You may be able to get rid of paper files after 7 years. But you should have at least scanned in your taxes for as long as you have been filing. Also you should keep the supporting documents W2s from employers, 1099s for interest and any other paperwork supporting your income. Also you should have any paperwork that supports your expenses and deductions. You will need to keep tax forms that relate to student loan interest home interest, stock losses (and income as well) and any receipts that support anything on you taxes.

The piles that were made to get them in completely disorganized my office. My financial papers were already an organized chaos. Some files were in the office some were in the basement. Mail was in the kitchen, bedroom and the office.

With moving in the cabinets, I begin my journey to organize my home financial records. This also marks a new beginning for ChangeJarSavings.

ChangeJarSavings started as a personal finance blog. I then got caught up in chasing deals. I wanted to share these deals but with increasing work demands, ChangeJarSavings deals fell by the wayside. A promotion at work meant even less time and I stopped posting all together.

Three months ago, I became unemployed. So I started to look around at my life and decided I needed to make some changes. I needed to get my financial life back in order, as well as find a job. Here it is October 18 and no job yet. I am mentally prepared to start organizing my life and it starts with my office.

For ChangeJarSavings the changes will happen over time. However, the focus will be returning to more personal finance stories. Please follow me as I go through setting up a new household filing system and organizing my life.

Just my 2 cents. Jim @ ChangeJarSavings.com

© 2010 ChangeJarSavings.com

Just my 2 cents. Jim @ ChangeJarSavings.com

© 2010 ChangeJarSavings.com

Just my 2 cents. Jim @ ChangeJarSavings.com

© 2010 ChangeJarSavings.com

January
1/3: General Mills, Red Plum (2), Smart Source (2)
1/10: Red Plum, Smart Source
1/17: Proctor & Gamble, Red Plum, Smart Source
1/24: Red Plum, Smart Source
1/31: Red Plum, Smart Source

February
2/7: Smart Source
2/14: No Inserts
2/21: General Mills, Procter & Gamble, Smart Source
2/28: Red Plum, Smart Source

March
3/7: Proctor & Gamble, Red Plum, Smart Source
3/14: Red Plum, Smart Source
3/21: Red Plum, Smart Source
3/28:2 Proctor & Gamble, Red Plum, Smart Source

April
4/4: No Inserts
4/11: Red Plum, Smart Source
4/18: Red Plum, Smart Source
4/25: Red Plum, Smart Source

May
5/2: Proctor & Gamble, Red Plum, Smart Source
5/9: Red Plum, Smart Source
5/16: Red Plum (2), Smart Source
5/23: Red Plum, Smart Source
5/30: No Inserts

June
6/6: Proctor & Gamble, Red Plum, Smart Source
6/13: Smart Source
6/20: Red Plum, Smart Source
6/27: Red Plum, Smart Source

July
7/4: No Inserts
7/11: Red Plum, Smart Source
7/18: Smart Source
7/25: Red Plum, Smart Source

August
8/1: Proctor & Gamble, Red Plum, Smart Source
8/8: Red Plum, Smart Source
8/15: Red Plum, Smart Source
8/22: Red Plum, Smart Source
8/29: Proctor & Gamble, Red Plum, Smart Source

September
9/5: No Inserts
9/12: Red Plum (2), Smart Source
9/19: Red Plum, Smart Source
9/26: Red Plum, Smart Source

October
10/3: Proctor & Gamble, Red Plum, Smart Source
10/10: Red Plum, Smart Source
10/17: Red Plum, Smart Source
10/24: Red Plum, Smart Source
10/31: Red Plum, Smart Source

November
11/7: Proctor & Gamble, Red Plum, Smart Source
11/14: Red Plum, Smart Source
11/21: Red Plum, Smart Source
11/28: No Inserts

December
12/5: Proctor & Gamble, Red Plum, Smart Source
12/12: Red Plum, Smart Source
12/19: No Inserts
12/26: No Inserts

Just my 2 cents. Jim @ ChangeJarSavings.com

© 2010 ChangeJarSavings.com